Debt Service Coverage Ratio (DSCR) Calculator
Annual Rental Income: 600000
Annual Operating Expenses: 150000
Annual Debt Payments: 300000
Net Operating Income: 600000 - 150000 = 450000
Expected Calculation: 450000 / 300000 Expected Result: 1.50
A rental property may generate good income, but one important question remains:
Is that income enough to comfortably cover the property's debt payments?
The Prozameen DSCR Calculator helps you compare the property's net operating income with its annual mortgage or loan payments.
What is DSCR?
DSCR stands for Debt Service Coverage Ratio.
It compares the income generated by a property with the amount required to service its debt.
In simple terms, it can help show how much income is available to cover annual loan payments.
How to Use the Calculator
Enter:
- Annual Rental Income
- Annual Operating Expenses
- Annual Debt Payments
The calculator will estimate the property's DSCR.
DSCR Formula
DSCR = Net Operating Income ÷ Annual Debt Payments
Net Operating Income is:
Annual Rental Income - Annual Operating Expenses
Example
Suppose a rental property generates:
- Annual Rental Income: 600,000
- Annual Operating Expenses: 150,000
- Annual Debt Payments: 300,000
Net Operating Income:
450,000
Estimated DSCR:
1.50
This means the property's estimated net operating income is 1.5 times its annual debt payments.
Understanding the Result
A DSCR of:
1.00
means estimated net operating income is equal to annual debt payments.
A result above 1.00 means estimated operating income is greater than the debt payments entered.
A result below 1.00 means estimated operating income is lower than the annual debt payments entered.
Lenders may use their own DSCR requirements, calculation methods and qualifying criteria.
DSCR compares property income with debt obligations. If you are unfamiliar with the income side of the calculation, first review Net Operating Income (NOI).
Why Can DSCR Be Useful?
DSCR can help property owners and investors understand the relationship between rental income, operating costs and loan obligations.
It can also make it easier to compare financing scenarios before making further decisions.
Important Information
The Mortgage / EMI Calculator can help estimate loan payments, while the Loan-to-Value (LTV) Calculator provides another perspective on property financing and leverage.
This calculator provides a simplified estimate.
Actual lender calculations may treat income, expenses, reserves, taxes and debt obligations differently.
The result does not determine whether a mortgage or investment loan will be approved.
